17 August 2001

Emergency aid for USA again

By Philip Clarke

US president, George W Bush, this week signed off another emergency aid package for his countrys beleaguered farmers – the fourth such bail out in as many years.

The latest deal will see about $5.5bn (£3.9bn) being paid to growers to help them through another serious drought which has hit crop yields and sparked numerous fires. Continued low commodity prices has also hampered US farmers earnings.

Grain and cotton producers will get the bulk of the additional direct payments, worth some $4.6bn (£3.3bn). Another $420m (£300m) will go to oilseed growers.

The latest pay out means that the US has spent over $30bn (£21bn) in four years in emergency farm aid. The Senate had hoped to push the new package to over $7bn (£5.2bn), but Mr Bush insisted on a more "modest" sum.

EU officials have been dismayed by the US action, accusing it of winding up agricultural support, while at the same time demanding that other countries cut theirs. They point out that total taxpayers funding to US agriculture now runs at about $76bn (£54bn) a year, compared with $55bn (£39bn) in the EU. Yet the US only has 2m farmers compared with 7m in the EU.

The commission also argues that the ad hoc emergency packages have become so routine that US farmers are now basing their planting decisions on them.

The latest bail out has to be spent by the end of September to come within this years fiscal budget. US agriculture secretary, Ann Veneman, has promised to get the aid cheques to farmers as soon as possible.

Parliamentarians are then due to start negotiating a new long term farm bill, to come into effect next year to replace the 1996 Freedom to Farm Act, which sought to reduce US taxpayer support for the industry.

Early drafts suggested a possible return to the old deficiency payment support system, acknowledged as being one of the most trade distorting, (Business, Jul 20). &#42